New data reveals Ireland's construction sector slowed considerably in August, posting the weakest activity levels this year. The decline was driven by plunging commercial construction.
The latest Construction PMI dropped to 44.9 in August, well below the 50 mark indicating contraction. The reading was even lower than August 2021's 46.9, highlighting reversed momentum.
Construction PMI stands for Purchasing Managers' Index for the construction sector. It is a key monthly economic indicator that provides insights into the performance and health of the construction industry.
Commercial building showed the steepest fall after consistent expansion in early 2022. This slowdown may benefit the market however, curbing risks of oversupply and rising vacancy rates.
The residential construction slowdown also continued, with activity still below 2021 levels and remaining in decline.
While the downturn deepens, input cost inflation has reaccelerated after two years of relief, squeezing already thin margins. This suggests recent energy price hikes are now impacting the industry.
On a positive note, most Irish construction firms remain optimistic, hiring more staff for the eighth straight month. But with project delays likely amidst the downturn, resilience will be tested.